Experts have estimated the cost of poor information quality at from 15 to 25% of operating profits. This assumes that no concerted effort has already been made to improve quality. The actual achievable number is less. However, even if you could get only 60% of that back you would add 9 to 15% to the bottom line. This is a considerable amount. If you are a corporation, this is a lot of profit. If you are an education institution, this is a lot of money added for improving the campus or faculty. If you are a charitable organization, this is a lot more money going to recipients. If you are a governmental organization, this is more value for the tax dollar.
Although these numbers are considerable, they represent the value of concentrating on improving information quality for the organization as it currently exists. However, I suggest that better-quality information systems will reduce the cost of, and accelerate the completion of, steps in evolving the organization to newer business models. There has never been a time in my lifetime when companies were not in the process of implementing newer business or manufacturing systems that promised huge returns when completed. Many of these changes were considered essential for survival. The latest example of this is the move to being Internet based.
Changing a corporation's business and operating systems to a base of high-quality data makes changes occur faster, at lower cost, and with better-quality outcomes. CRM projects are a good example. Moving to a customer-centric model, whereby information about customers drives sales and marketing activities, promises huge returns to corporations. However, we hear that over 60% of CRM implementations either are outright failures or experience long delays. Many of these problems are caused by inaccurate data, making it difficult, if not impossible, to complete the projects.
The major reason for improving the quality of data is to make the corporation more able to make business and operational changes. This adds a degree of flexibility to the corporation, giving it the potential for huge paybacks over time. If your company is the first one to complete implementation of new technologies, the competitive edge you gain can be considerable.